Wednesday preview: Tesco expected to reveal LFL decline in Q3
All eyes in the retail industry will be focused firmly on supermarket giant Tesco on Wednesday morning with the company scheduled to report on third-quarter trading.
All eyes in the retail industry will be focused firmly on supermarket giant Tesco on Wednesday morning with the company scheduled to report on third-quarter trading.
Last week, Nomura released a research report on Tesco (rated 'buy'), saying that it forecasts third-quarter like-for-like (LFL) sales excluding VAT and fuel to come in 0.9% lower than last year, a reversal from the 0.1% growth reported in the second quarter.
Similarly, Credit Suisse (which rates Tesco as 'neutral') said it expects "little underlying progress" in the third quarter given tough markets: the broker reckons that LFL sales ex-fuel ex-VAT will fall 0.75% in the quarter.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Seymour Pierce last week reiterated its 'reduce' rating for the stock, saying that it is too early to judge whether the group's 'Build a Better Tesco' strategy in the UK (through range and store refresh, space relay, service and increased marketing/promotional spend) is working. "From a share price perspective even if Tesco does have a relatively good Christmas, there will still be no visibility on whether UK profits have bottomed until the second half of 2013," said Seymour analyst Kate Calvert.
However, analysts at Jefferies decided to stay more upbeat, keeping their 'buy' recommendation on Tuesday and saying that Tesco is "gaining traction ahead of Xmas".
While the broker highlights that sales growth across the 'Big 4' supermarkets (Tesco, Morrison, Sainsbury and ASDA) was "subdued" last month (according to retail figures from Kantar), Tesco's market share continues to grow. Jefferies said that Tesco has outgrown (on a market share basis) its peers by 200 basis points ("the biggest rate of outperformance recorded in any four-week period for six years") and improvements in execution are starting to pay off.
"Tesco is approaching Christmas with the strongest trading momentum of the Big 4, and this seems to be hurting Sainsbury. Morrisons trading form remains poor, whilst ASDA is slowing in a controlled manner."
INTERIMS
First Property Group, Stagecoach Group
INTERIM EX-DIVIDEND DATE
Alliance Pharma, Atkins (WS), Big Yellow Group, Brown (N.) Group, Cello Group, Chamberlin, City of London Group, Cranswick, Creston, De La Rue, Dee Valley Group, Dee Valley Group (Non-Voting), Edge Performance VCT 'C' Shares, Electrocomponents, Energy Technique, Establishment Inv Trust, European Residual Income Investments Cell, Fuller Smith & Turner, Headlam Group, Hogg Robinson Group, Homeserve, London Stock Exchange Group, Majestic Wine, Management Consulting Group, MDM Engineering Group Ltd. (DI), Norcros, Northern 3 VCT, PayPoint, Phoenix IT Group, Plastics Capital, Rensburg AIM VCT, SABMiller, Severn Trent, Shanks Group, Slingsby H.C, Tarsus Group, TR Property Inv Trust, TR Property Inv Trust Sigma Shares, UK Mail Group , Value and Income Trust, Victoria, VP
QUARTERLY EX-DIVIDEND DATE
Bank of America Corp., Land Securities Group, Real Estate Credit Investments PCC Ltd
Q3
Tesco
INTERNATIONAL ECONOMIC ANNOUNCEMENTS
ABC Consumer Confidence (US) (22:00)
Crude Oil Inventories (US) (15:30)
Goods Orders (US) (15:00)
ISM Non-Manufacturing (US) (15:00)
ISM Services (US) (15:00)
MBA Mortgage Applications (US) (12:00)
PMI Composite (EU) (09:00)
PMI Composite (GER) (08:55)
PMI Services (EU) (09:00)
Retail Sales (EU) (10:00)
FINALS
Brewin Dolphin Holdings, Innovation Group, Jelf Group, Sage Group, Silverdell
ANNUAL REPORT
Grainger
SPECIAL EX-DIVIDEND PAYMENT DATE
British Empire Securities & General Trust, Carnival, Renaissance Russia Infrastructure Equities Ltd, Rights & Issues Inv Trust Capital Shares, Wolseley
EGMS
Ablon Group Ltd., Middlefield Canadian Income PCC
AGMS
Asia Digital Holdings, International Biotech Trust, K3 Business Technology Group
UK ECONOMIC ANNOUNCEMENTS
BoE Interest Rate Decision (12:00)
BRC Shop Price Index (00:01)
Official Reserves (09:30)
PMI Services (09:30)
FINAL DIVIDEND PAYMENT DATE
Regenersis
FINAL EX-DIVIDEND DATE
Aberdeen Asset Management, Associated British Foods, British Empire Securities & General Trust, Conygar Investment Company, CVS Group, Debenhams, Grainger, Greencore Group, Local Shopping REIT, Northamber, Renewable Energy Generation Ltd., YouGov
Sign up to Money Morning
Our team, led by award winning editors, is dedicated to delivering you the top news, analysis, and guides to help you manage your money, grow your investments and build wealth.
-
8 of the best houses for sale with libraries
This week: the best houses for sale with libraries – from a five-storey Georgian townhouse in Bloomsbury, London, to a 15th-century property with a library in a medieval tower in Lozère, France
By Natasha Langan Published
-
Investors pull money from UK equities as government warns of “painful” Budget
The government’s post-election honeymoon period has been short-lived, and investors are shying away from UK equities as a result
By Katie Williams Published